Most systems for processing the sale of products are seller-driven, whereby the seller prices, packages, configures and offers the product for sale, and the buyer decides whether or not to accept the seller's offer. In a buyer-driven system, on the other hand, the buyer dictates the terms of the offer and one or more sellers decide whether or not to accept. A "help wanted" advertisement, for example, is a buyer-driven inquiry since the employer is looking to locate and buy the services of a qualified employee. The inquiry is advertised to a large number of potential employees, who may respond by submitting their resumes to the prospective employer.
Many large organizations, such as corporations or government entities, utilize a buyer-driven system to purchase goods or services at the lowest possible price. Initially, the purchaser formulates a detailed written specification, typically called a "Request for Proposal" (RFP), setting forth the quantities and requirements of what the purchaser is looking to buy. Once finalized, the RFPs are distributed to a list of known potential suppliers. Potential suppliers then screen the RFPs to identify those that they might be able to fulfill, and thereafter determine whether or not to invest the necessary time and effort to submit a formal, legally binding proposal to the buyer by a deadline established in the RFP. Once submitted, the proposals are evaluated by the buyer, and the chosen supplier, corresponding to the selected proposal, is notified that it has "won" the business at the price quoted.
Large organizations can take advantage of the benefits afforded by the RFP process because their volume buying represents a worthwhile opportunity for suppliers to compete for their business. In addition, large organizations have the resources to communicate their buying needs to a sufficient number of suppliers. As a result, large organizations can often achieve substantial unit cost savings, especially on commodities or commodity services (such as office supplies, insurance or long distance telephone service) and on perishable items (such as airline tickets and hotel rooms). Individual consumers, however, cannot effectively participate in the RFP process with current systems because they generally do not have the bulk buying power and resources of large organizations.
While there have been attempts to utilize the Internet to effectuate bilateral buyer-driven transactions between individual consumers and sellers, those attempts have been largely unsuccessful. For example, buyers can post "wanted" advertising at little or no cost on "bulletin board" type Internet sites, such as United Computer Exchange and Classified 2000, or submit bids for available products in an online auction, such as Interactive Auction Online. Thus, in an online classified system, consumers can essentially post their own RFP to a large number of potential sellers. In an online auction, however, buyers are unable to post their offer to a multiple of sellers.
In practice, it is impractical for potential sellers to frequent the various "bulletin board" sites and online classified systems, or respond to the individual RFPs which typically have diverse formats, conditions, terms, and language styles. In addition, sellers are deterred from using such a process because there is (i) no guarantee of the authenticity of the RFP, (ii) the cost of negotiating with individual consumers is often too high, and (iii) it is difficult to enforce any agreement (including payment guarantees'which may be reached between the consumer and the seller. Thus, a seller's item may be removed from the available inventory when a buyer desires to purchase the item, until the purchase price is submitted by the buyer. Since there is no guarantee that the buyer will complete the transaction, however, the purchase price may never be submitted and the seller's item will have to be resubmitted. In turn, the absence of a critical mass of sellers reduces the incentive for buyers to post their RFPs.
When both the buyer and the seller involved in a transaction are individuals, the above-mentioned limitations of current systems become even more apparent. In the collectibles industry, for example, the buyers and sellers of collectibles, such as coins, stamps, art prints, comic books, baseball cards, jewelry, or other used or secondary market goods, are typically individuals or their agents, such as consignment shops. Although most individuals have a home full of valuable items that they have acquired offer the years, but no longer desire, reselling such unwanted items is a time-consuming and often frustrating process. Even if a seller is able to locate a potential buyer, after expending significant time and money attracting and screening potential buyers, the buyer is typically unwilling to pay the full value for the item to an individual seller. Buyers recognize that an individual seller does not have the same overhead as an institutional seller, and attempt to utilize this knowledge to obtain cost savings. In addition, individual sellers typically do not provide a warranty, and the buyer is therefore often required to bear the risk that the goods are authentic and of reasonable quality.
In addition, since individual buyers and sellers are typically unknown to each other, and lack the reputation of an institutional buyer or seller, both parties are typically unwilling to perform until the other has done so. While the seller is typically unwilling to deliver the item until the buyer has paid in full, the buyer is likewise unwilling to pay for the item until the item has been delivered and inspected. Each party recognizes that their leverage, or source of recourse, is lost once they have performed. Although an escrow agent or other third party can be effectively utilized to reduce such post-transaction performance issues, the escrow agent does not (i) guarantee the authenticity of the buyer's offer; or (ii) reduce the cost of negotiating and consummating a transaction among individual buyers and sellers.
In fact, although the present invention permits buyers and sellers to communicate and exchange goods by means of a centralized electronic network, the role of the escrow agents or other third parties, such as collectibles dealers or consignment shops, does not disappear. Such dealers become essential in an Internet marketplace, as their expertise in authenticating goods provides a mechanism for assuring buyers and sellers that they will not be cheated by each other. In this manner, dealers become authenticators and derive profit from their expertise, without having to risk their capital in maintaining an inventory.
As apparent from the above deficiencies with conventional systems for selling goods, a need exists for a buyer-driven system that permits a buyer to obtain used goods, for example, to fill a collection, at a price set by the buyer, typically below the retail price. Yet another need exists for a system that permits sellers to dispose of unwanted items and thereby obtain value from such unwanted items. Another need exists for a system that permits passive sellers, i.e., those sellers who do not want to be a salesman, to dispose of the inventory that fills their home. A further need exists for a system that permits a dealer to eliminate his inventory and to utilize his expertise to make sales from a virtual inventory.